South Korean steel giant POSCO has decided to raise automotive steel sheet prices for delivery to some automakers in the second half of the current year. The quantum of the hike is not known; however, market participants are anticipating it to be around KRW 100,000/tonne (t).
POSCO has plans to change the contract cycle for some automakers from annual to semi-annual, and has decided to increase the supply unit price of automotive steel sheets to some customers in the second half of the year, according to the agreed formula.
The increase in steelmaking raw material prices such as that of iron ore and coking coal in the first half of the year and the comparatively slow rise in automobile sheet prices are likely to be taken into account while agreeing to the formula.
In H1CY22, iron ore prices peaked to over $150-160/t between March and April, and the price of coking coal from Australia at the same time reached over $600/t levels.
Despite such sharp increase in raw material costs in H1, the supply unit price for major domestic automobile steelmakers such as POSCO and Hyundai Steel increased by only KRW 153,000/t.
Since automobile steel sheet prices are likely to increase in H2CY’22, there is a possibility that auto parts suppliers who were demanding a cut in prices earlier, will also decrease. The hike is on the back of increased purchase unit price that continued through the first half of the year which was not properly reflected in the unit price of delivery.
However, there are concerns that the adjustment of selling price by domestic steelmakers may lead to end-users demanding a reduction in the supply unit price.
Note: This article has been published in accordance with an article exchange agreement between SteelDaily and SteelMint.
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